The Labour Party has taken aim at National’s new childcare tax rebate policy, calling it “not very well thought through” and a “rushed response” to previous Government announcements.
Earlier on Sunday, National leader Christopher Luxon announced his party will introduce a childcare tax rebate of up to $75 per week for New Zealand families if it is elected into power at the October election.
During his State of the Nation address, he argued families are doing it tough with rising rents, mortgage rates, grocery bills, and childcare expenses.
The FamilyBoost childcare tax rebate would benefit 130,000 low and middle-income families, Luxon said, with families earning up to $180,000 receiving a 25 percent rebate on their early childhood education expenses to a maximum of $3900 per year depending on their income.
The maximum rebate would be $75 per week, which would be available to those earning up to $140,000. It would be paid fortnightly by IRD to the parents’ bank account.
The rebate would then gradually reduce as family incomes rise above $140,000. The maximum weekly rebates for families earning $150,000, $160,000 and $170,000 are $56.25, $37.50, and $18.75, respectively.
“Making childcare more affordable will also help families who would like to work more hours. With FamilyBoost, parents have more choices to return to work or extend their hours knowing their children are well looked after and it’s not costing the house. Literally,” Luxon said.
“The good news is that FamilyBoost will be fully funded by cutting Labour’s wasteful spending on contractors and consultants.”
But Labour has come out swinging at the policy, saying it “is not very well thought through and doesn’t target those who need the most help”.
Minister for Social Development Carmel Sepuloni said it is good to see National “finally” recognising the importance of childcare assistance.
“National have a history of not adjusting when childcare costs increase, they put a freeze on the income eligibility for childcare in 2010 and never lifted it, meaning thousands of families lost access to childcare support,” she said.
However, this latest policy doesn’t help those who are on the lowest incomes, Sepuloni added.
“The policy is a rushed response to our work on childcare, which includes helping parents with the cost, helping make early childhood centres more sustainable and ensuring good teachers stay in the profession because they’re paid what they’re worth,” she said.
“It also appears they haven’t properly thought through how they’ll pay for it. When we introduced 20 Hours ECE in 2007 there was an increase in average hours attended per week for three and four-year-olds of around 8-10 percent. If just a quarter of the 130,000 households increase the number of hours their child spends in childcare by five hours a week, their policy blows out by around $70 million a year – and that’s likely to be a conservative estimate.”
National said the FamilyBoost policy would cost $249 million per year and be fully funded from money it expects can be saved by “reversing the blow-out in wasteful spending on public sector consultants overseen by Chris Hipkins as Public Services Minister”.
Sepuloni said New Zealanders will get to see Labour’s plans soon, given an in-depth review of childcare is close to completion. This review was mentioned in November last year during an announcement Sepuloni made alongside then-Prime Minister Jacinda Ardern about widening access to childcare assistance.
An increase to the Family Tax Credit was announced that would come into force in April, as well as a reversal to the freeze on income thresholds for childcare eligibility National put in place in 2010, among other measures.
But Sepuloni said there is still more work to do on childcare.
“That’s why we’ve prioritised it, with the first step of our childcare assistance changes coming into force in less than a month.”
Meanwhile, the ACT Party said although National’s policy is a good start to addressing the cost of living, it’s “too easy for Labour to steal”. Leader David Seymour said Labour’s policy announced last year is “remarkably similar” to National’s, and instead he’d like to see a tax cut for every earner to help address cost of living.
“Under ACT’s fully costed tax changes from our alternative budget, a sole parent with two children earning $70,000 would save $2276. Importantly, all earners would benefit, every teacher, nurse, and police officer would keep more money under ACT,” Seymour said.
“A commitment to cutting wasteful spending from National is welcomed. But the next Government can’t just trim the sails, the country needs to sail in a whole new direction.”
Seymour said his party’s alternative budget would reduce government spending without touching frontline services, the deficit that causes inflation, and taxes.
ACT has identified how expenditure could be reduced by $6.8 million, he said, with measures including an end to corporate welfare and returning the number of bureaucrats to the 47,000 Labour inherited. This would allow for $3.3 billion in tax cuts, reducing the middle-income tax rate down from 30c to 17.5c in the first year, Seymour added.
But the Green Party is worried that National and ACT wanting to cut taxes, particularly for the “wealthiest few”, would tear up New Zealand’s social safety net and lock people in poverty.
Green Party co-leader Marama Davidson said the National Party doesn’t see that childcare is a “public good, not an individual work expense”.
“National has opposed action to boost the incomes of families trapped in poverty; they want to put harsh penalties on solo parents; and will make life harder for people who rent. Once again, they have completely misunderstood the reality of what it’s like to live on a low income in Aotearoa right now,” Davidson said.
“It simply will not wash for National to offer support for childcare if in every other area of life they are going to make life so much harder. It is especially concerning that the National Party isn’t planning to invest at all in early childhood education itself.”
She said the Green Party would extend 20 hours of early childhood education to two-year-olds and re-design the Working for Families scheme.
Meanwhile, the Early Childhood Council applauded National’s move, saying this policy offers more children the education and social benefits of ECE and will be a “welcome relief” for parents struggling to pay rising fees.
“More investment in early learning is fantastic for our tamariki and their families, even more so for children from disadvantaged backgrounds,” said CEO Simon Laube.
“This initiative would offer Auckland centres struggling after lockdowns and the summer’s weather events an urgently needed boost at re-engaging early learners in particular.”
He added that for parents, National’s announcement would be “much more significant” than last year’s childcare subsidy threshold changes and it avoids stigma about accessing social welfare support.
“The policy recognises that more children in ECE means more parents able to work, and more children getting their education off to a great start to build the capability of our future workforce.”